Exhibit 10.23
REVOLVING CREDIT AND TERM LOAN AGREEMENT
THIS AGREEMENT is made and entered into this 31st day of January, 1997 by and
between KORN/FERRY INTERNATIONAL (the "BORROWER") and 1ST BUSINESS BANK, a
California banking corporation (the "BANK").
ARTICLE I
AMOUNT AND TERMS OF THE LOAN
Section 1.01. THE REVOLVING LOAN. From the date the Borrower has satisfied
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all conditions precedent as set forth in Article II hereof, to and until
November 30, 1997 (the "CONVERSIOn DATE"), Bank will lend to Borrower an amount
up to but not in excess of Five Million Dollars ($5,000,000) outstanding in the
aggregate at any one time (the "REVOLVING LOAN") in one or more advances (each
an "Advance"). Within the limits of time and amount and subject to the other
provisions hereof, Borrower may borrow, repay and reborrow all or part of the
Revolving Loan in multiple integrals of TWO HUNDRED AND FIFTY THOUSAND DOLLARS
($250,000.00), at any time up until the Conversion Date, at which time the
unpaid principal balance of the Revolving Loan will be converted to a term loan
(the "TERM LOAN") in accordance with, and subject to the conditions set forth
in, Section 1.02 hereof. The Revolving Loan shall be evidenced by two promissory
notes (the "REVOLVING NOTES") which shall be in substantially the form of
Exhibit A. Each Advance, the principal amount thereof, the interest rate
applicable thereto and the unpaid principal balance owing on the Revolving Notes
at any time may be evidenced by
endorsement on the Notes or by Bank's internal records, including daily computer
print-outs, and such entries shall be prima facie evidence of the amount of the
Revolving Loan outstanding and the terms thereof, but the failure of the Bank to
make any such notation shall not release Borrower from the obligation to repay
amounts borrowed hereunder.
Section 1.02. THE TERM LOAN. The principal balance of the Revolving Loan
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outstanding on the Conversion Date shall be converted to the Term Loan on the
Conversion Date, except that Bank shall not be obligated to make such conversion
unless Borrower, as of the Conversion Date, shall be in compliance with all of
the provisions of this Agreement and any other agreement by and between Borrower
and Bank. The Term Loan shall be evidenced by two promissory notes, (the "TERM
NOTES"), which shall be substantially in the form of Exhibit B. The Revolving
Loan and Term Loan are collectively referred to herein as the "LOANS", and the
Revolving Notes and Term Notes are collectively referred to here as the "NOTES".
Section 1.03. PROCEDURE FOR ADVANCES. The Borrower shall request Revolving
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Loan advances by submitting to Bank an Authorization for Disbursement in the
form of Exhibit E (i) on or before 2:00 p.m. on the date of any proposed Advance
bearing interest under the Reference Rate Option; or (ii) two London Business
Days prior to the date of any proposed Advance bearing Interest at the LIBOR-
Rate Option. The Authorization for Disbursement shall specify (i) the amount of
the proposed Advance, (ii) the interest rate option and interest period
applicable thereto, and (iii) instructions for disbursement of the funds. The
Authorization for Disbursement shall be executed by an officer of the Borrower
and Bank shall be entitled to rely upon such Authorization for Disbursement
without inquiry.
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Section 1.04. INTEREST - REVOLVING LOAN AND TERM LOAN. The unpaid principal
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balance of the Loans shall bear interest at either: 1) a rate per annum equal to
one half percent (1/2%) below the Bank's Reference Rate (which shall be equal to
the rate announced by the Bank from time to time as its Reference Rate) and
shall vary concurrently with any change in such Reference Rate (the "Reference
Rate Option"): or 2) A fixed per annum rate of interest equal to the LIBOR-Rate
plus one and one half percent (1 1/2%) (the LIBOR-Rate Option). LIBOR-Rate
Advances must be in minimum amounts of five hundred thousand dollars ($500,000)
and integral multiples thereof. LIBOR-Rate Advances can be made for periods of
one, three and six months as selected by the Borrower (each an "Interest
Period"). No LIBOR-Rate Advance on the Revolving Line will be made which would
mature after the Conversion Date. No LIBOR-Rate Advance on the Term Loan will be
made which would mature after the Maturity Date. The first day of the Interest
Period must be a Business Day. The last day of the Interest Period and the
actual number of days during the Interest Period will be determined by the Bank
using the practices of the London inter-bank market. The Bank will have no
obligation to accept an election for a LIBOR-Rate Advance if any of the
following described events has occurred and is continuing:
(i) Dollar deposits in the principal amount, and for the periods equal to
the Interest Period, of a LIBOR-Rate Advance are not available in the London
inter-bank market; or
(ii) the LIBOR Rate does not accurately reflect the cost of a LIBOR-Rate
Advance: or (iii) Borrower shall have a one time option at the Conversion Date,
to fix the rate of interest for the Term Loan. Said fixed rate shall be equal to
the U.S. Treasury Note Yield (as quoted in the Wall Street Journal), for U.S.
Treasury Notes with a maturity equivalent to the Maturity Date of the
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Term Loan, plus 1.75%. Such fixed rate Advance will be subject to a prepayment
premium equal to the amount of interest which would have accrued had the Advance
been outstanding for the full maturity.
Section 1.05. MANDATORY PAYMENTS. Borrower shall pay interest only on all
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outstanding Advances under the Revolving Notes calculated on the outstanding
principal balance thereunder, payable on the last Business Day of each fiscal
quarter, commencing April 30, 1997 and ending on (and including) the Conversion
Date. The Term Notes shall provide for equal quarterly installments of principal
each together with accrued interest, payable on the last Business Day of each
fiscal quarter commencing on the last Business Day of the first fiscal quarter
following the Conversion Date, and continuing until November 30, 2002 (the
"Maturity Date") at which time all unpaid principal and accrued interest shall
be due and payable.
Section 1.06. DELIVERY OF NOTES. The Borrower shall deliver the Notes to
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the Bank pursuant to Article II.
Section 1.07. OPTIONAL PREPAYMENTS. The Borrower may at any time prepay the
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Notes in whole or ratably in part, provided that each partial prepayment shall
be in the principal amount not less than One Hundred Thousand Dollars ($100,000)
and shall be applied first to any interest then due, and then, to principal
which, in the case of prepayment to the Term Notes, shall be applied to the
installment of principal in the inverse order of their maturities.
Section 1.08. PAYMENTS AND COMPUTATIONS. All payments hereunder by the
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Borrower shall be made without deduction or offset in lawful money of the United
States of America to the Bank at its Lending Office in immediately available
funds. The Borrower hereby authorizes the
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Bank, if and to the extent payment owed to the Bank is not promptly made
pursuant to the Notes or this Section 1.05, to charge against the Borrower's
account with the Bank an amount equal to the interest and fees from time to time
due to the Bank hereunder and under the Notes. All computations of interest
hereunder shall be made by the Bank on the basis of a 360-day year and the
actual number of days (including the first day but excluding the last day)
elapsed.
Section 1.09. PAYMENT ON NON-BUSINESS DAYS. Whenever any payment to be made
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hereunder or under the Notes shall be stated to be due on a day which is not a
Business Day, such payment shall be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
payment of interest or fee, as the case may be.
Section 1.10. USE OF PROCEEDS. The proceeds of the Loan shall be used only
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for general corporate purposes of Borrower and its Subsidiaries.
Section 1.11. OPTIONAL SECURITY. The obligations hereunder and under the
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Notes are unsecured; provided, however, that in the event an Event of Default
(as defined in Article V below), or any condition or event which with the giving
of notice or lapse of time, or both, would become such an Event of Default shall
have occurred and be continuing, the Bank may, at its option, elect to secure
such obligations and upon receipt by the Borrower of written notice of such
election, Borrower will execute and deliver to the Bank such security
agreements, financing statements and deeds of trust, and such other documents,
instruments, notices and agreements as the Bank in its reasonable judgment deems
necessary or desirable to obtain a perfected security interest in and lien upon
such assets of Borrower (and/or of its Subsidiaries) to fully and adequately
secure the
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repayment of the Loan, together with all interest thereon, and all other
obligations of Borrower hereunder.
Section 1.12. FEES. The Borrower shall pay to the Bank a Commitment fee in
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the amount of three eighths percent (3/8%) per annum of the unused portion of
the Commitment The Commitment fee shall be paid in arrears on a quarterly basis.
Section 1.13. INTEREST AFTER MATURITY. Any Advance which is not paid as and
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when due hereunder shall bear interest from and after the Maturity Date to the
date paid at a rate which is 2% above the Reference Rate.
Section 1.14. INDEMNITY. The Borrower shall indemnify the Bank from and
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against any loss or expense (including loss of margin) incurred as a consequence
of any payment or prepayment of any LIBOR-Rate Advance on any date other than
the last day of the Interest Period applicable thereunto whether or not such
payment or pre-payment is mandatory. Amounts payable by Borrower pursuant to
this Section 1.14 shall be payable on demand.
ARTICLE II
CONDITIONS OF LENDING
SECTION 2.01. CONDITIONS PRECEDENT TO THE LOAN. The obligation of the Bank
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to make any Advance on the Revolving Loan is subject to the conditions precedent
that the Bank shall have received on or before the day of the initial Advance
the following, each dated the date of the initial Advance, in form and substance
satisfactory to the Bank;
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(a) Duly executed Notes, payable to the order of the Bank (or to the order
of the Bank and such assignee as the Bank may designate with the agreement of
the Borrower).
(b) A copy of the Articles of Incorporation of the Borrower, certified by
the California Secretary of State.
(c) A copy of the By-Laws of the Borrower, certified by its secretary.
(d) Certified copies of the resolutions of the Board of Directors of the
Borrower authorizing this Agreement and the Notes and within ninety days of the
execution of this Agreement, certified copies of the resolutions of the Boards
of Directors of the Subsidiaries which are corporations authorizing the
Guarantees.
(e) An Opinion of O'Melveny & Xxxxx, LLP, counsel to the Borrower, as to
such matters as required by the Bank.
Section 2.02. ADDITIONAL CONDITIONS PRECEDENT. The obligation of the Bank
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to make the initial and any subsequent Advance shall be subject to the further
conditions precedent that the Bank shall have received the following on or prior
to the day of the requested Advance, and that the statements therein shall be
true and correct as of such date:
(a) A certificate of the Borrower's Chief Financial Officer to the effect
that:
(i) The representations and warranties contained in Section 1.09 and
3.01 are true and correct on and as of the date of the disbursement as though
made on and as of such date;
(ii) No event has occurred and is continuing, and no event would
result from the making of the Advance which constitutes an Event of Default or
would constitute an Event of Default but for the requirement that notice be
given or time elapse or both;
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(iii) The proceeds of the Advance will be applied in a manner
consistent with the provisions of Sections 1.09 and 3.01(h); and
(iv) The making of such Advance will not contravene any law,
regulation or order applicable to the Borrower.
(b) Such other approvals, opinions or documents as the Bank may reasonably
request.
ARTICLE III
REPRESENTATIONS ND WARRANTIES
Section 3.01. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The Borrower
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represents and warrants as follows:
(a) SUBSIDIARIES. A complete list of the Borrower's Subsidiaries is
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attached as Exhibit C, which Exhibit also shows the jurisdiction of
incorporation or organization of each Subsidiary, and Borrower's percentage
ownership of or interest in each Subsidiary, including directors' qualifying
shares. The Borrower has unrestricted rights to vote the shares or interests of
all Subsidiaries and (except as restricted by applicable law) to receive
dividends or distributions thereon. The outstanding shares of all Subsidiaries
which are corporations are validly issued, fully paid and non-assessable.
(b) INCORPORATION ETC. The Borrower and its Subsidiaries are duly
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organized, validly existing and in good standing under the laws of the
jurisdictions of their respective incorporation or organization, and are
qualified to do business in all jurisdictions where the nature of their business
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or activities requires such qualification, except where such qualification has
not had or will not have a material adverse effect on the Borrower.
(c) AUTHORIZATION. The execution, delivery and performance by the Borrower
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of this Agreement and the Notes are within the Borrower's corporate powers, have
been duly authorized by all necessary corporate action, require no governmental
approval, and do not contravene law or any contractual restriction binding on or
affecting the Borrower.
(d) APPROVALS. No authorization or approval or other action by, and no
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notice to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by the Borrower of this
Agreement or the Notes.
(e) BINDING OBLIGATIONS. This Agreement is, and the Notes when delivered
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hereunder will be, legal, valid and binding obligations of the Borrower
enforceable against the Borrower in accordance with their respective terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights of
creditors generally or the application of equitable principles.
(f) FINANCIAL STATEMENTS. The consolidated balance sheet of the Borrower
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and its Subsidiaries as of April 30, 1996, and the related consolidated
statements of income and retained earnings of the Borrower and its Subsidiaries
for the fiscal year then ended, copies of which have been furnished to Bank,
fairly present the financial condition of the Borrower and its Subsidiaries as
of such date and the results of the operations of the Borrower and its
Subsidiaries for the period ended on such date, all in accordance with generally
accepted accounting principles consistently
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applied, and since that time, except as disclosed in writing to Bank prior to
the date of this Agreement, there has been no material adverse change in such
condition or operations.
(g) LITIGATION. There are no pending or, to the Borrower's knowledge,
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threatened actions or proceedings affecting the Borrower or any of its
Subsidiaries before any court or governmental agency, which in management's
opinion may materially adversely affect the financial condition or operations of
the Borrower.
(h) USE OF PROCEEDS. Borrower is not engaged principally in, nor does it
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have as one of its important activities, the business of extending credit for
the purpose of purchasing or carrying any margin stock (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System), and no
part of the proceeds of the Loan will be used to purchase or carry any margin
stock or extend credit to others for the purpose of purchasing or carrying any
margin stock or used for any purpose which violates Regulation U or Regulation X
or any other provision of law or the apposite regulations.
(i) ERISA. With respect to Borrower's or any Subsidiary's employee benefit
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plans, except as disclosed to Bank in writing, (a) Borrower and all Subsidiaries
are in compliance in all material respects with the applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") and the
Internal Revenue Code of 1986, as amended (the "CODE"); (B) no "reportable
event" within the meaning of Section 4043 of ERISA ("REPORTABLE EVENT") has
occurred that has not been timely reported or that, whether or not reported,
would authorize the involuntary termination of one of such plans; (c) there are
no "accumulated funding deficiencies" within the meaning of Section 412(a) of
the Code exceeding $250,000 in the
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aggregate and no waiver of the minimum funding standards of Code Section 412 has
been requested or granted by the Internal Revenue Service.
ARTICLE IV
COVENANTS OF THE BORROWER
Section 4.01. AFFIRMATIVE COVENANTS. So long as the Notes shall remain
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unpaid or the Bank shall have any Commitment hereunder, the Borrower will,
unless the Bank shall otherwise agree in writing:
(a) COMPLIANCE WITH LAWS, ETC. Comply, and cause each of its Subsidiaries
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to comply, in all material respects with all applicable laws, rules, regulations
and orders (the failure to comply with which would have a material adverse
effect upon the Borrower), such compliance to include, without limitation, the
payment of, before the same become delinquent, all taxes, assessments and
governmental charges imposed upon it or upon its property except to the extent
contested in good faith.
(b) INSURANCE. Maintain and cause each of its Subsidiaries to maintain
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insurance to such extent and covering such risks as is usual for companies
engaged in the same or similar businesses and on request will advise the Bank of
all insurance so carried.
(c) REPORTING REQUIREMENTS. Furnish to the Bank:
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(i) as soon as available and in any event within seventy-five (75)
days after the end of each quarter of each fiscal year of the Borrower,
consolidated balance sheets of the Borrower and its Subsidiaries as of the end
of such quarter and consolidated statements of income and
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retained earnings of the Borrower and its Subsidiaries for the period commencing
at the end of the previous fiscal year and ending with the end of such quarter,
certified by the Chief Financial Officer or President of the Borrower, subject
to year end audit adjustments;
(ii) As soon as available and in any event within one hundred twenty
(120) days after the end of each fiscal year projected consolidated statements
of income and retained earnings for the succeeding year in an acceptable form to
the Bank.
(iii) As soon as available and in any event within one hundred twenty
(120) days after the end of each fiscal year of the Borrower, a copy of the
annual consolidated audit report for such year for the Borrower and its
Subsidiaries, containing financial statements for such year, certified in a
manner acceptable to the Bank by Xxxxxx Xxxxxxxx & Co., or other independent
certified public accountants acceptable to the Bank;
(iv) Promptly after the filing or receiving thereof, copies of all
reports and notices with respect to any employee benefit plan maintained by the
Borrower disclosing: (a) any Reportable Event; (b) any "prohibited transaction"
within the meaning of Section 4975 of the Code; or (c) the voluntary or
involuntary termination of any such plan that is subject to Title IV of ERISA;
(v) no later than seventy-five (75) days after the end of each of
the first three fiscal quarters of each fiscal year of the Borrower in the case
of Sections 4.02(a)-(d) and (f)-(m), and one hundred and twenty (120) days after
the end of each fiscal year of the Borrower in the case of Sections 4.02(a)-(m),
a statement in form and substance satisfactory to Bank evidencing
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compliance with the appropriate requirements of Section 4.02, certified by the
Chief Financial Officer or President of Borrower; and
(vi) such other information respecting the condition or operations,
financial or otherwise, of the Borrower or any of its Subsidiaries as the Bank
may from time to time reasonably request.
(d) INSPECTION OF BOOKS AND RECORDS. Allow the Bank and its agents to
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inspect the Borrower's properties and examine, audit, and make copies of books
and records at any reasonable time. If any of the Borrower's properties, books
or records are in the possession of a third party to permit the Bank or its
agents to have access to perform inspections or audits and to respond to the
Bank's requests for information concerning such properties, books and records.
(e) NOTICE OF EVENTS. Give the Bank, promptly upon the Borrower's
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obtaining such knowledge, written notice of any condition or event which has
resulted or would with the giving of notice, lapse of time or both, result in:
(i) a material adverse change in the Borrower's consolidated
financial condition or operations, or
(ii) a breach of or noncompliance with any material term,
representation, warranty, condition or covenant contained herein or in any
document delivered pursuant hereto, or
(iii) a breach of or noncompliance with any material term,
representation, warranty, condition or covenant of any material contract to
which the Borrower or any of its Subsidiaries is a party or by which they or
their property may be bound.
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(f) NOTICE OF DISPUTES. Give the Bank, promptly upon the Borrower's
------------------
obtaining such knowledge, written notice of any legal, judicial or regulatory
proceedings affecting the Borrower or any of its Subsidiaries in which the
amount involved is material and not covered by insurance and which, if adversely
determined, would have a material adverse effect upon the Borrower.
(g) FORMATION OF SUBSIDIARIES. Advise the Bank promptly of the formation,
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restructuring, sale, transfer or liquidation of any Subsidiary and update
Exhibit C to this Agreement accordingly.
(h) GUARANTEES. Within ninety (90) days of the date hereof, deliver to the
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Bank guarantees of the Borrower's obligations hereunder by all Subsidiaries of
the Borrower listed in Exhibit C hereto, all in form and substance satisfactory
to the Bank.
Section 4.02. NEGATIVE COVENANTS. So long as the Notes shall remain unpaid
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or the Bank shall have any Commitment hereunder, the Borrower will not, without
the written consent of the Bank:
(a) DEBT. Create or suffer to exist, or permit any of its Subsidiaries to
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create or suffer to exist, any Debt, including Debt secured by the cash
surrender value of any life insurance policy owned by the Borrower, whether or
not such debt is recognized on the Borrower's financial statements as prepared
in accordance with generally accepted accounting principles; other than:
(i) Debt described on Exhibit D hereto;
(ii) the Loan contemplated hereby;
(iii) purchase money obligations which are secured by security
interests in the equipment or fixtures so acquired, and capital leases entered
into for the use and acquisition of
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equipment, in the ordinary course of business, and guarantees of any such Debt;
provided that such security interests shall not extend to other assets of the
Borrower or its Subsidiaries;
(iv) trade debt incurred in the ordinary course of business and on
normal and customary trade terms;
(v) Debt arising out of the issuance of letters of credit issued
by Bank or with the consent of Bank, in support of Borrower or its Subsidiaries;
(vi) notes payable for a term not in excess of five (5) years,
issued in connection with the purchase of shares of stock of the Borrower owned
by shareholders or in connection with the payment of benefits due to Persons who
leave the employment of the Borrower; provided however, that the issuance of
such notes by the Borrower shall not otherwise create an Event of Default
hereunder or an event which, with the passage of time or the giving of notice,
would constitute an Event of Default hereunder;
(vii) Debt incurred by the Borrower to its Subsidiaries or incurred
by Subsidiaries to the Borrower; and
(viii) Debt secured by the cash surrender value of life insurance
policies owned by the Borrower, whether or not such debt is recognized on the
Borrower's financial statements, providing that the proceeds of such Debt are
either used solely for the purpose of making scheduled premium payments
currently due on such policies or making investments in liquid marketable
securities.
(b) NET WORTH RATIO. Permit its Net Worth Ratio (after taking into account
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all Restricted Cash) to be greater than the ratio of 2.5:1.0 at all times or
permit its net worth to be
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greater than the ratio of 2.25:1.0 after excluding the accrued liability,
"Accrued Bonuses," from "outstanding Indebtedness," as defined in Section 6.01.
(c) CONSOLIDATED TANGIBLE NET WORTH. Permit its Consolidated Tangible Net
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Worth to be less than Forty Million Dollars ($40,000,000) at all times.
(d) WORKING CAPITAL & CURRENT RATIO. Permit its Net Working Capital to be
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less than Seventeen Million Dollars ($17,000,000)or permit its ratio of Current
Assets to Current Liabilities to be less than 1.20 to 1.0, both on a
consolidated basis.
(e) NET INCOME. Permit its Consolidated Net Income in any fiscal year
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to be less than Two Million Dollars ($2,000,000).
(f) SALES OF ASSETS. Permit any Subsidiary to sell, lease, abandon or
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otherwise dispose of, directly or indirectly, a material amount of the assets of
the Borrower or the Borrower and its Subsidiaries, taken as a whole, except for
sales, leases or transfers to the Borrower or any wholly-owned Subsidiary.
(g) CONSOLIDATION, MERGER. Permit any Subsidiary to, consolidate with or
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merge into any other corporation or entity, except (i) any Subsidiary may
consolidate with or merge into the Borrower or a wholly-owned Subsidiary; and
(ii) any Subsidiary the value of whose assets are not material may consolidate
or merge with any other entity provided that the terms of such consolidation or
merger are negotiated at arm's length and constitute fair value under the
circumstances.
(h) COVERAGE. Permit its Consolidated Pre interest expense and pre-tax
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income during any consecutive twelve (12) month period (computed on a quarterly
basis) to be less than the sum
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of two hundred percent (200%) of consolidated current maturities of long term
debt, and consolidated interest expense for the preceding twelve month period.
(This ratio will be calculated at the end of each fiscal quarter, using the
results of that quarter and each of the three immediately preceding quarters.)
(i) GUARANTIES. Permit any Subsidiary to, guarantee, endorse or otherwise
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become or be contingently liable upon any Indebtedness or obligations of any
person, firm or corporation (other than Indebtedness or obligations of the
Borrower or any Subsidiary permitted under this Agreement), in excess of
$250,000 on an unsecured basis and $500,000 on a secured basis, at any time in
the aggregate, except in the ordinary course of business as may be necessary to
support its Subsidiaries.
(j) LIENS, ETC. And will not permit any Subsidiary to create or suffer
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to exist any lien, security interest or other charge or encumbrance, or any
other type of preferential arrangement, upon or with respect to any of its
accounts receivable and properties, whether now owned or hereafter acquired,
except:
(i) liens for taxes, assessments or other governmental charges or
levies not at the time delinquent or thereafter payable without penalty or being
contested in good faith;
(ii) liens of carriers, warehousemen, mechanics, materialmen,
landlords and other liens imposed by law, incurred in the ordinary course of
business for sums not yet delinquent or being contested in good faith;
(iii) liens securing Debt permitted under Section 4.02(a) and
4.02(i); and
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(iv) other liens or encumbrances which in the aggregate are
immaterial to the Borrower and its Subsidiaries on a consolidated basis and are
incurred in the ordinary course of the Borrower's business.
(k) INVESTMENT AND ADVANCES. Permit any Subsidiary (i) to advance, lend or
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contribute funds to any Person (other than Borrower or any Subsidiary), whether
by way of loan, stock purchase, capital contribution or otherwise, or (ii) to
acquire by purchase of stock or by purchase of assets, in exchange for cash or
shares of capital stock or other securities of the Borrower, any Subsidiary or
any other Person, all or substantially all of any division or portion of the
assets and business of any other Person (other than the Borrower or any
Subsidiary or Strategic Compensation Associates); (iii) provided, however, that
the Borrower may lend funds (excluding payments to employees against future
bonuses) to employees for the sole purpose of purchasing shares of common stock
of the Borrower and the Borrower may loan or provide guarantees up to but not in
excess of at any one time One Million Five Hundred Thousand Dollars ($1,500,000)
in the aggregate to employees of the Borrower for other purposes.
(1) ERISA COMPLIANCE. And with respect to any employee benefit plan
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maintained by it or any Subsidiary, permit:
(i) any "prohibited transaction" as such term is defined in
Section 4975 of the Code;
(ii) any "accumulated funding deficiency" as such term is defined in
Section 412(a) of the Code;
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(iii) the voluntary or involuntary termination of any such Plan under
circumstances that could result in material liability of the Borrower; or
(iv) the imposition of a lien on the property of the Borrower
pursuant to Section 4068 of ERISA or Section 412(a) of the Code.
(m) Other Business Activities. Engage in any business activities
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substantially different from the Borrower's present business.
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ARTICLE V
EVENTS OF DEFAULT
Section 5.01. EVENTS OF DEFAULT. The occurrence of any one of the following
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events shall be an "Event of Default" hereunder:
(a) The Borrower shall fail to pay any installment of principal of, or
interest on, the Notes when due; or
(b) Any representation or warranty made by the Borrower herein or by the
Borrower (or any of its officers) in connection with this Agreement shall prove
to have been incorrect in any material respect when made; or
(c) The Borrower shall fail to perform or observe any of the terms,
covenants or agreements contained in Article IV of this Agreement; or
(d) The Borrower shall fail to perform or observe any other term, covenant
or agreement contained in any other section of this Agreement and any such
failure shall remain unremedied for thirty (30) days thereafter; or
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(e) The Borrower or any of its Subsidiaries shall:
(i) fail to pay any material Debt (excluding Debt evidenced by the
Notes) of the Borrower or such Subsidiary (as the case may be), or any interest
or premium thereon, when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument relating to such Debt; or
(ii) fail to perform any term, covenant or condition on its part to
be performed under any agreement or instrument relating to any such material
Debt, when required to be performed, and such failure shall continue after the
applicable grace period, if any, specified in such agreement or instrument, if
the effect of such failure to perform is to accelerate, or to permit the
acceleration of, the maturity of such Debt; or any such Debt shall be declared
to be due and payable, or required to be prepaid (other than by a regularly
scheduled required prepayment), prior to the stated maturity thereof; or
(f) The Borrower or any of its Subsidiaries shall admit in writing its
inability to pay its debts, or shall make a general assignment for the benefit
of creditors; or any proceeding shall be instituted by or against the Borrower
or any of its Subsidiaries seeking to adjudicate it bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking appointment of a receiver, trustee, or other
similar official for it or for any substantial part of its property, and any
such proceeding instituted against the Borrower or such Subsidiary shall not
have
-20-
been dismissed after sixty (60) days; or the Borrower or any of its Subsidiaries
shall take any corporate action to authorize any of the actions set forth above
in this subsection (f); or
(g) A judgment or order for the payment of money in an amount in excess of
$500,000 shall be rendered against the Borrower or any of its Subsidiaries and
such judgment or order shall continue unsatisfied or unstayed, and in effect for
a period of thirty (30) consecutive days; or
(h) The institution of a voluntary or involuntary termination of any
employee benefit plan maintained by the Borrower or any Subsidiary pursuant to
Title IV of ERISA if, as of the date thereof, the amount of unfunded "benefit
liabilities" is (after giving effect to the tax consequences thereof), in the
good faith judgment of the Bank, material.
(i) A material adverse change occurs in the Borrower's financial condition,
properties, or ability to repay the Revolving Loan.
Section 5.02. UPON AN EVENT OF DEFAULT. If any Event of Default shall have
------------------------
occurred and be continuing, then:
(a) if the Event of Default is described in Section 5.01(f), the Commitment
shall forthwith terminate and the Notes, all interest thereon, and all other
amounts payable under this Agreement shall become forthwith due and payable,
without presentment, demand, protest, or notice of any kind, all of which are
hereby expressly waived by the Borrower, and
(b) if the Event of Default is described in any Section other than Section
5.01(f), the Bank, may by notice to the Borrower, (i) declare the Commitment to
be terminated, whereupon the same shall forthwith terminate, or (ii) declare the
--
Notes, all interest thereon and all other amounts payable under this Agreement
to be forthwith due and payable, whereupon the Notes, all such
- 21 -
interest and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower;
ARTICLE VI
CERTAIN DEFINITIONS
Section 6.01 CERTAIN DEFINITIONS. As used herein, and unless otherwise
-------------------
defined herein, the following terms have the following respective meanings:
"Business Day". Unless otherwise provided in this Agreement, a business day
is a day other than a Saturday or a Sunday on which the Bank is open for
business in California. All payments and disbursements which would be due on a
day which is not a Business Day will be due on the next Business Day. All
payments received on a day which is not a business day will be applied to the
credit on the next business day.
"Commitment" shall mean the amount of $5,000,000 which the Borrower is,
------------
at any time permitted to borrow in accordance with Section 1.01 and Section
1.02.
"Consolidated Gross Expenses" means the annual total of all costs and
-----------------------------
expenses of the Borrower and each Subsidiary determined in accordance with
generally accepted accounting principles consistent with those applied in the
preparation of the financial statements referred to in Section 3.01(f) as such
principles may be modified from time to time.
"Consolidated Gross Revenues" means the annual total of all items of income
-----------------------------
and revenues of the Borrower and each Subsidiary, determined in accordance with
generally accepted accounting
- 22 -
principles consistent with those applied in the preparation of the financial
statements referred to in Section 3.01(f) as such principles may be modified
from time to time.
"Consolidated Net Income" means Consolidated Gross Revenues less
-------------------------
Consolidated Gross Expenses (adding or subtracting, as appropriate extraordinary
income or expenses) and less all taxes.
"Consolidated Tangible Net Worth" means the total of all assets of the
---------------------------------
Borrower and its Subsidiaries, determined on a consolidated basis, less the sum
of (i) all liabilities of the Borrower and its Subsidiaries, determined on a
consolidated basis, except for such amounts which are specifically subordinated
to the Bank in a form satisfactory to the Bank and (ii) the amount, if any, of
intangible assets such as goodwill, trademarks, trademark rights, trade name
rights, copyrights, patents, patent rights and licenses, unamortized debt
discounts and expenses which appear on the asset side of the consolidated
balance sheet of the Borrower and its Subsidiaries, and (iii) all amounts due
from officers, directors, or shareholders of the Borrower where the Borrower
retains no rights of offset against other indebtedness.
"Current Assets" and "Current Liabilities", means those assets and
---------------- ---------------------
liabilities which are so classified by the Borrower's certified public
accountant in accordance with generally accepted accounting principles, except
that deferred taxes shall be excluded from Current Liabilities for purpose of
this calculation.
"Debt" means:
------
(i) Indebtedness for borrowed money or for the deferred purchase price
of property or services (other than trade debt to vendors and suppliers in the
ordinary course of
- 23 -
business and not more than ninety (90) days overdue) in respect of which such
corporation is liable, contingently or otherwise, as obligor, guarantor or
otherwise, or in respect of which such corporation otherwise assures a creditor
against loss;
(ii) obligations of such corporation under leases which shall have
been or should be, in accordance with generally accepted accounting principles,
included in determining liabilities as shown on the liability side of a balance
sheet of such Person as of the date as of which Indebtedness is to be
determined.
(iii) unfunded benefit liabilities under each employee benefit plan
maintained for employees of such corporation and covered by Title IV or ERISA.
"Indebtedness" of any Person, means all items of indebtedness which, in
--------------
accordance with generally accepted accounting principles, would be included in
determining liabilities as shown on the liability side of a balance sheet of
such Person as of the date as of which Indebtedness is to be determined.
"LIBOR Rate" means for each Advance under the LIBOR-Rate Option, the rate
------------
per annum determined by the Bank by dividing (the resulting quotient to be
rounded upward to the nearest 1/100 of 1%) (x) the rate of interest (which shall
be the same for each day of such LIBOR-Rate Advance) determined in good faith by
the Bank by reference to the Wall street Journal or otherwise (which
determination shall be presumed correct absent obvious error) to be the average
of the rates per annum for deposits in U.S. Dollars offered to banks in the
London Interbank market at approximately 11:00 o'clock a.m., London time, two
London Business Days prior to the first day of
- 24 -
such Advance for delivery on the first day of such Advance by (y) a number equal
to 1.00 minus the LIBOR-Rate Reserve Percentage.
The "LIBOR-Rate Reserve Percentage" for any date is the maximum effective
percentage (expressed as a decimal fraction, rounded upward to the nearest 1/100
of 1%), as determined in good faith by the Bank (which determination shall be
conclusive absent manifest error), which is in effect on such day as prescribed
by the Board of Governors of the Federal Reserve System (or any successor) for
determining the reserve requirements (including, with limitation, supplemental,
marginal and emergency reserve requirements) with respect to Eurocurrency
funding (currently referred to as "Eurocurrency liabilities") of a member bank
in such System but only to the extent actually incurred by the Bank, the Bank's
determination thereof to be presumed correct in the absence of obvious error.
The LIBOR-Rate shall be adjusted automatically as of the effective date of each
change in the LIBOR-Rate Reserve Percentage.
Advances bearing interest under the LIBOR-Rate Option shall be referred to
as "LIBOR-Rate Advances".
"London Business Day" means a Business Day which is also a day for dealing
---------------------
in deposits of U.S. dollars by and among banks in the London Interbank Market.
"Long Term Debt" means any Debt which does not finally mature within twelve
----------------
(12) months.
"Material" means, in reference to payments or liabilities, an amount equal
----------
to or exceeding five percent (5%) of Consolidated Tangible Net Worth; in
reference to other matters a condition or
- 25 -
event which creates a change or which with the giving of notice or lapse of
time, or both, would create a change in the financial condition of the Borrower
and its Subsidiaries in this amount.
"Month" with respect to a LIBOR-Rate Interest Period has the following
-------
meaning unless a calendar month is specified or the context otherwise clearly
requires:
(i) if the first day of such LIBOR-Rate Interest Period is the last
day of a calendar month, a "month" is the interval between the last days of
consecutive calendar months;
(ii) otherwise, a "month" is the interval between the days in
consecutive calendar months numerically corresponding to the first day of such
LIBOR-Rate Interest Period or, if there is no such numerically corresponding day
in a particular calendar month, then the last day of such calendar month.
"Net Working Capital" means the excess of Current Assets over Current
---------------------
Liabilities of the Borrower and its Subsidiaries (after taking into account all
Restricted Cash).
"Net Worth Ratio" means the ratio of (i) outstanding Indebtedness of the
-----------------
Borrower and its Subsidiaries including outstanding standby letters of credit
less outstanding borrowings which are secured by said letters of credit on a
consolidated basis, less subordinated debt, to (ii) Consolidated Tangible Net
Worth plus subordinated debt and shall be expressed as a ratio, so that, for
example, if the amount of such Indebtedness is twice the amount of Consolidated
Tangible Net Worth, then the Net Worth Ratio is 2 to 1.
"Person" means any natural person, corporation, firm, association,
--------
government, governmental agency or any other entity and whether acting in an
individual, fiduciary or other capacity.
- 26 -
"Restricted Cash" means all cash of the Borrower or any Subsidiary which is
-----------------
not available for the payment of principal or interest hereunder.
"Subsidiary" means as to any parent corporation, any other corporation
------------
of which at least a majority of the outstanding shares having by the terms
thereof ordinary voting power to elect a majority of the Board of Directors of
such corporation (irrespective of whether or not at the time shares of any other
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by such parent corporation and/or one or more of
its Subsidiaries and also means any partnership in which such parent corporation
has directly or indirectly an interest sufficient to control the management or
operations of the partnership.
"Unused Commitment" means the Commitment amount minus the sum of the
-------------------
aggregate amount of all Advances outstanding hereunder.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01 AMENDMENTS, ETC. No amendment or waiver of any provision of
---------------
this Agreement or of the Notes, nor consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Bank, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
- 27 -
Section 7.02 NOTICES, ETC. All notices and other communications provided
------------
for hereunder shall be in writing (including telegraphic communication) and
mailed, transmitted by facsimile transmission, telegraphed or delivered, if to
the Borrower, at its address at 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000, Xxx Xxxxxxx,
Xxxxxxxxxx 00000, Facsimile No. (000) 000-0000, Attention: Xxxxxx X. Xxxxx, Vice
President-Finance; if to the Bank, at its address at 000 Xxxx Xxxxx Xxxxxx, Xxx
Xxxxxxx, Xxxxxxxxxx 00000, Facsimile No. (000) 000-0000, Attention: Commercial
Loan Department (or any successor office) or to such other address as either
party may designate to the other in writing. All such notices and communications
shall, when mailed or telegraphed, be effective when deposited in the mails or
delivered to the telegraph company, respectively, addressed as aforesaid, except
that notices to the Bank pursuant to the provisions of Article I shall not be
effective until received by the Bank.
Section 7.03. COSTS, EXPENSES AND TAXES. The Borrower agrees to pay on
-------------------------
demand all reasonable costs and expenses in connection with the preparation,
execution and delivery and administration of this Agreement, the Notes and the
other documents to be delivered hereunder, including the reasonable fees and
out-of-pocket expenses of counsel for the Bank, with respect thereto, and with
respect to advising the Bank as to its rights and responsibilities under this
Agreement and all reasonable costs and expenses, if any, in connection with the
enforcement of this Agreement, the Notes and the other documents to be delivered
hereunder.
The Borrower will not deduct any taxes from any payments it makes to the
Bank. If any government authority imposes any taxes or charges on any payments
made by the Borrower, the Borrower will pay the taxes or charges. Upon request
by the Bank, the Borrower will confirm that
- 28 -
it has paid the taxes by giving the Bank official tax receipts within 30 days
after the due date. However, the Borrower will not pay the Bank's net income
taxes.
Section 7.04. ACCOUNTING TERMS. All accounting terms not specifically
----------------
defined herein shall be construed in accordance with generally accepted
accounting principles consistent with those applied in the preparation of the
financial statements referred to in Section 3.01(f) hereof, as such principles
may be modified from time to time, and all financial data submitted pursuant to
this Agreement shall be prepared in accordance with such principles.
Section 7.05. SURVIVAL. The representations and warranties of Borrower
--------
contained herein shall survive the making of the Revolving Loan and shall remain
effective until all indebtedness contemplated hereby shall have been paid by
Borrower in full.
Section 7.06. ONE AGREEMENT. This Agreement and any related security or
-------------
other agreements required by this Agreement, collectively:
(a) represent the sum of the understandings and agreements between the Bank
and the Borrower concerning the Revolving Loan; and
(b) replace any prior oral or written agreements between the Bank and the
Borrower concerning this Revolving Loan; and
(c) are intended by the Bank and the Borrower as the final, complete and
exclusive statement of the terms agreed to by them.
In the event of any conflict between this Agreement and any other
agreements required by this Agreement, including without limitation the
inclusion of additional fees and additional defaults in the Application and
Agreement for Stand-by Letters of Credit, this Agreement will prevail.
- 29 -
Section 7.07. NO WAIVER. No failure to exercise, and no delay in exercising
---------
any right, power or remedy hereunder or under any Note or under any other
document delivered pursuant hereto shall impair any right, power or remedy which
any Bank or the Borrower may have, nor shall any such delay be construed to be a
waiver of any such rights, powers or remedies, or an acquiescence in any breach
or default under this Agreement or under any Note or under any other document
delivered pursuant hereto, nor shall any waiver of any breach or default of the
Borrower or any Bank or the Bank hereunder be deemed a waiver of any default or
breach subsequently occurring. The rights and remedies herein specified are
cumulative and not exclusive of any rights or remedies which any Bank or the
Bank or the Borrower would otherwise have.
Section 7.08. SEVERABILITY OF PROVISIONS. In case any one or more of the
--------------------------
provisions contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.
Section 7.09. PARTICIPATIONS. The Bank shall have the right at any time to
--------------
sell, assign, transfer, negotiate or grant participations to other banks in all
or part of the Commitment, the Loans or the obligations of Borrower outstanding
under this Agreement or the Notes, and any other documents in connection with
this Agreement; provided that any such sale, assignment, transfer, negotiation
or participation shall be in compliance with the applicable federal and state
securities laws. The Bank agrees to give notice to Borrower of the identity of
any such buyer, assignee, transferee or participant prior to consummation of the
applicable transaction. The Borrower hereby acknowledges and agrees that any
such disposition will give rise to a direct obligation of the
- 30 -
Borrower to the participant; provided that the Borrower may rely upon any
waiver, consent, amendment or other written advice obtained from Bank pursuant
to Section 7.02 hereof. Each buyer, assignee, transferee and participant shall
be entitled to all of the rights of the Bank hereunder and may exercise any and
all rights of set-off and banker's lien as fully as though the borrower were
directly indebted to such buyer, assignee, transferee and participant in the
amount of the consideration for such sale, assignment, transfer or
participation, plus any accrued but unpaid interest or fees. In connection with
any participation under this Section 7.09, Bank may disclose any and all
information concerning the Borrower and its Subsidiaries in its possession to
the participant and the Borrower hereby consents to such disclosure. Bank agrees
to inform such participant that all such information is confidential.
Section 7.10. COUNTERPARTS. This Agreement may be executed by the parties
------------
hereto individually, or in any combination of the parties hereto, in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 7.11. SET-OFFS. Bank is hereby authorized at any time and from
--------
time to time, without notice to the Borrower (any such notice being expressly
waived by the Borrower), to set-off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by the Bank to or for the credit or the account
of the Borrower against any and all obligations of the Borrower now or hereafter
existing under this Agreement and the Notes held by the Bank irrespective of
whether the Bank shall have made any demand under this Agreement or the Notes
and although such obligations may be unmatured. The
- 31 -
Bank hereunder agrees promptly to notify the Borrower after each set-off and
application made by the Bank, as the case may be, provided that the failure to
give such notice shall not affect validity of such set-off and application. The
rights of the Bank under this Section 7.11 are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which the Bank
may have, and in the exercise of such rights, the Borrower agrees that Bank
shall assume no liability to the Borrower, and Subsidiary or any other party for
special, indirect or consequential damages which may arise as a result of a set-
off.
Section 7.12. BINDING EFFECT; GOVERNING LAW. This Agreement shall be
-----------------------------
binding upon and inure to the benefit of the borrower, the Bank and their
respective successors and assigns when it shall have been executed by the
Borrower and the Bank. The Borrower shall not have the right to assign its
rights hereunder or any interest herein without the prior written consent of the
Bank. This Agreement shall be governed by and construed in accordance with the
internal laws of the State of California.
7.13. ARBITRATION.
-----------
(a) This paragraph concerns the resolution of any controversies or
claims between the Borrower and the Bank, including but not limited to those
that arise from:
(i) This Agreement (including any renewals, extensions or
modifications of this Agreement;
(ii) Any document, agreement or procedure related to or delivered
in connection with this Agreement;
(iii) Any violation of this Agreement; or
- 32 -
(iv) Any claims for damages resulting from any business conducted
between the Borrower and the Bank, including claims from injury to persons,
property or business interests (torts).
(b) At the request of the Borrower or the Bank, any such controversies or
claims will be settled by arbitration in accordance with the United States
Arbitration Act. The United States Arbitration Act will apply even though this
Agreement provides that it is governed by California law.
(c) Arbitration proceedings will be administered by the American
Arbitration Association and will be subject to its commercial rules of
arbitration.
(d) For purposes of the application of the statute of limitations, the
filing of an arbitration pursuant to this paragraph is the equivalent of the
filing of a lawsuit, and any claim or controversy which may be arbitrated under
this paragraph is subject to any applicable statute of limitations. The
arbitrators will have the authority to decide whether any such claim or
controversy is barred by the statute of limitations and, if so, to dismiss the
arbitration on that basis.
(e) If there is a dispute as to whether an issue is arbitrable, the
arbitrators will have the authority to resolve any such dispute.
(f) The decision that results from an arbitration proceeding may be
submitted to any authorized court of law to be confirmed and enforced.
(g) The procedure described above will not apply if the controversy or
claim, at the time of the proposed submission to arbitration, arises from or
relates to an obligation to the Bank secured by real property located in
California. In this case, both the Borrower and the Bank must consent to
- 33 -
submission of the claim or controversy to arbitration. If both parties do not
consent to arbitration, the controversy or claim will be settled as follows:
(i) The Borrower and the Bank will designate a referee (or a panel
of referees) selected under the auspices of Arbitration Association in the same
manner as arbitrators are selected in Association-sponsored proceedings;
(ii) The designated referee (or the panel of referees) will be
appointed by a court as provided in California Code of Civil Procedure Section
638 and the following related sections;
(iii) The referee (or the presiding referee of the panel) will be an
active attorney or a retired judge; and
(iv) The award that results from the decision of the referee (or the
panel) will be entered as a judgment in the court that appointed the referee, in
accordance with the provisions of California Code of Civil Procedure Sections
644 and 645.
(h) This provision does not limit the right of the Borrower or the Bank
to:
(i) exercise self-help remedies such as setoff;
(ii) foreclose against or sell any real or personal property
collateral; or
(iii) act in a court of law, before, during or after the arbitration
proceeding to obtain;
(A) an interim remedy; and/or
(B) additional or supplementary remedies.
(i) The pursuit of or a successful action for interim, additional or
supplementary remedies, or the filing of a court action, do not constitute a
waiver of the right of the Borrower or
- 34 -
the Bank, including the suing party, to submit the controversy or claim to
arbitration if the other party contests the lawsuit. However, if the controversy
or claim arises from or relates to an obligation to the Bank which is secured by
real property located in California at the time of the proposed submission to
arbitration, this right is limited according to the provision above requiring
the consent of both the Borrower and the Bank to seek resolution through
arbitration.
(j) If the Bank forecloses against any real property securing this
Agreement, the Bank has the option to exercise the power of sale under the deed
of trust or mortgage, or to proceed by judicial foreclosure.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
KORN/FERRY INTERNATIONAL
A California Corporation
BY: /s/ Xxxxxx X. Xxxxx
-----------------------------
TITLE: V.P. FINANCE
--------------------------
1ST BUSINESS BANK
BY: /s/ Xxxxxx Xxxxxx, Xx.
-----------------------------
TITLE: CHAIRMAN & CEO
--------------------------
BY: /s/ Xxx Xxxxxxxxxxx
-----------------------------
TITLE: VICE PRESIDENT
OR SENIOR VICE PRESIDENT
--------------------------
- 35 -
TERM NOTE
---------
$2,000,000 Los Angeles, California
January 31, 1997
FOR VALUE RECEIVED, XXXX-XXXXX INTERNATIONAL, a California corporation (the
"Borrower"), promises to pay to the order of MELLON BANK, a Pennsylvania banking
corporation (the "Bank") the principal sum of TWO MILLION DOLLARS ($2,000,000)
or, if less, the aggregate unpaid principal amount of all Loans made by the Bank
to the undersigned pursuant to the Revolving Credit and Term Loan Agreement by
and between the Borrower and the Bank dated as of January 31, 1997 as shown on
the records of the Bank or on the schedule attached hereto (and any continuation
thereof), payable on the Maturity Date, as defined in the Revolving Credit and
Term Loan Agreement; plus interest as calculated below.
Interest shall be payable from the date hereof on the unpaid principal balance
outstanding hereunder at any time quarterly, on the last Business Day of each
fiscal quarter, commencing on April 30, 1998 and continuing until the Maturity
Date:
(a) at either a fluctuating rate equal at all times to and including the date
of maturity, one half percent (1/2%) lower than the rate which the Bank publicly
announces from time to time at its Los Angeles Main Office (defined below) as
its "Reference Rate"; or
(b) a fixed rate of interest equal to the London Interbank Offered Rate (LIBOR)
of the same origination and maturity dates plus one and one half percent (1
1/2%). Fixed rate advances must be made with forty eight (48) hours advance
notice and in minimum increments of five hundred thousand dollars ($500,000).
Such advances will be subject to a prepayment penalty equal to the amount of
interest which would have accrued had the advance been outstanding for the full
maturity; or
(c) Borrower shall have a one time option at the Conversion Date, to fix the
rate of interest for the remaining term of the Loan. Said fixed rate shall be
equal to the U.S. Treasury Note Yield (as quoted in the Wall Street Journal),
for U.S. Treasury Notes with a maturity equivalent to the Maturity date of the
loan, plus 1.75%. Such advances will be subject to a prepayment penalty equal to
the amount of interest which would have accrued had the advance been outstanding
for the full maturity.
(d) after maturity, whether by acceleration or otherwise, both before as well
as after judgment, the Reference Rate plus two percent (2%).
Any change in the interest rate resulting from a change in the Reference Rate
shall be effective on and as of the date of such change.
Interest shall be computed on the basis of a year of 360 days for the actual
number of days elapsed.
Principal shall be due hereunder in equal quarterly installments, with the first
such installment due on the last Business Day of the first fiscal quarter
following the Conversion Date, with subsequent installments due on the last
Business Day of each fiscal quarter thereafter, and the last installment due on
or before November 30, 2002, at which time all outstanding principal an accrued
interest shall be due and payable.
Both principal and interest are payable in lawful money of the United States of
America, without deduction or offset, to the Bank at 000 Xxxx Xxxxx Xxxxxx, Xxx
Xxxxxxx, Xxxxxxxxxx 00000 (Los Angeles Main Office), in immediately available
funds.
The failure of the Bank to exercise its rights to make demand at any one time
will not constitute a waiver of such right at any subsequent time. Acceptance by
the Bank of any payment hereunder which is less than payment in full of all
amounts due and payable at the time of such payment shall not constitute a
waiver of the right to exercise such option at that time or any subsequent time
or nullify any prior exercise of such option, except as and to the extent
otherwise provided by law and any such payment may be applied to any
indebtedness owed to the Bank in any order the Bank chooses.
If this Note is not paid when due, whether on demand or at the date set forth
herein, the Borrower promises to pay all costs of collection including, but not
limited to, reasonable attorneys' fees and all expenses incurred in connection
with the protection of realization of any collateral securing the payment
hereof, or enforcement of any guarantee or security therefore, incurred by the
Bank or any holder hereof on account of such collection, whether or not suit is
actually filed thereof.
The Borrower, for itself, its successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
nonpayment of this Note.
This Note is one of the Notes referred to in, and is subject to and governed by,
the Revolving Credit and Term Loan Agreement. Reference is made thereto for the
definitions, terms, conditions and provisions governing this Note, including the
conditions under which the amounts owing hereunder may be accelerating.
This Note may be prepaid only in accordance with the terms of the Revolving
Credit and Term Loan Agreement.
This Note is made under and governed by the laws of the State of California.
XXXX-XXXXX INTERNATIONAL
By: /s/ Xxxxxx X. Xxxxx
---------------------------
By: ___________________________
TERM NOTE
---------
$3,000,000 Los Angeles, California
January 31, 1997
FOR VALUE RECEIVED, XXXX-XXXXX INTERNATIONAL, a California corporation (the
"Borrower"), promises to pay to the order of 1ST BUSINESS BANK, a California
banking corporation (the "Bank") the principal sum of THREE MILLION DOLLARS
($3,000,000) or, if less, the aggregate unpaid principal amount of all Loans
made by the Bank to the undersigned pursuant to the Revolving Credit and Term
Loan Agreement by and between the Borrower and the Bank dated as of January 31,
1997 as shown on the records of the Bank or on the schedule attached hereto (and
any continuation thereof), payable on the Maturity Date, as defined in the
Revolving Credit and Term Loan Agreement; plus interest as calculated below.
Interest shall be payable from the date hereof on the unpaid principal balance
outstanding hereunder at any time quarterly, on the last Business Day of each
fiscal quarter, commencing on April 30, 1998 and continuing until the Maturity
Date at either:
(a) a fluctuating rate equal at all times to and including the date of
maturity, one half percent (1/2%) lower than the rate which the Bank publicly
announces from time to time at its Los Angeles Main Office (defined below) as
its "Reference Rate"; or
(b) a fixed rate of interest equal to the London Interbank Offered Rate (LIBOR)
of the same origination and maturity dates plus one and one half percent
(1 1/2%). Fixed rate advances must be made with forty eight (48) hours advance
notice and in minimum increments of five hundred thousand dollars($500,000).
Such advances will be subject to a prepayment penalty equal to the amount of
interest which would have accrued had the advance been outstanding for the full
maturity; or
(c) Borrower shall have a one time option at the Conversion Date, to fix the
rate of interest for the remaining term of the Loan. Said fixed rate shall be
equal to the U.S. Treasury Note Yield (as quoted in the Wall Street Journal),
for U.S. Treasury Notes with a maturity equivalent to the Maturity date of the
loan, plus 1.75%. Such advances will be subject to a prepayment penalty equal
to the amount of interest which would have accrued had the advance been
outstanding for the full maturity.
(d) after maturity, whether by acceleration or otherwise, both before as well
as after judgment, the Reference Rate plus two percent(2%).
Any change in the interest rate resulting from a change in the Reference Rate
shall be effective on and as of the date of such change.
Interest shall be computed on the basis of a year of 360 days for the actual
number of days elapsed.
Principal shall be due hereunder in equal quarterly installments, with the first
such installment due on the last Business Day of the first fiscal quarter
following the Conversion Date, with subsequent installments due on the last
Business Day of each fiscal quarter thereafter, and the last installment due on
or before November 30, 2002, at which time all outstanding principal an accrued
interest shall be due and payable.
Both principal and interest are payable in lawful money of the United States of
America, without deduction or offset, to the Bank at 000 Xxxx Xxxxx Xxxxxx, Xxx
Xxxxxxx, Xxxxxxxxxx 00000 (Los Angeles Main Office), in immediately available
funds.
The failure of the Bank to exercise its rights to make demand at any one time
will not constitute a waiver of such right at any subsequent time. Acceptance by
the Bank of any payment hereunder which is less than payment in full of all
amounts due and payable at the time of such payment shall not constitute a
waiver of the right to exercise such option at that time or any subsequent time
or nullify any prior exercise of such option, except as and to the extent
otherwise provided by law and any such payment may be applied to any
indebtedness owed to the Bank in any order the Bank chooses.
If this Note is not paid when due, whether on demand or at the date set forth
herein, the Borrower promises to pay all costs of collection including, but not
limited to, reasonable attorneys' fees and all expenses incurred in connection
with the protection of realization of any collateral securing the payment
hereof, or enforcement of any guarantee or security therefore, incurred by the
Bank or any holder hereof on account of such collection, whether or not suit is
actually filed thereof.
The Borrower, for itself, its successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
nonpayment of this Note.
This Note is one of the Notes referred to in, and is subject to and governed by,
the Revolving Credit and Term Loan Agreement. Reference is made thereto for the
definitions, terms, conditions and provisions governing this Note, including
the conditions under which the amounts owing hereunder may be accelerating.
This Note may be prepaid only in accordance with the terms of the Revolving
Credit and Term Loan Agreement.
This Note is made under and governed by the laws of the State of California.
XXXX-XXXXX INTERNATIONAL
By:/s/ Xxxxxx X. Xxxxx
---------------------------
By:___________________________
EXHIBIT C
January 31, 1997
KORN/FERRY INTERNATIONAL SUBSIDIARIES
Parent Company
Korn/Ferry International, (California Corporation)
SUBSIDIARIES PERCENT-OWNED*
ARGENTINA
Korn/Ferry International S.A 100%
AUSTRALIA
Korn/Ferry International Pty. Limited* 100%
AUSTRIA (Branch of London)
Korn/Ferry Carre Xxxxx International, Ltd.
Niederlassung Osterreich 100%
BRAZIL
Korn/Ferry International S/C Ltda. 100%
CANADA
Korn/Ferry International Limited 100% (INACTIVE)
CHILE
Korn/Ferry International S.A. 100%
CHINA
Korn/Ferry International (China) Limited 100%
CZECH REPUBLIC
Korn/Ferry Carre/Xxxxx International spol.s.r.o. 100%
DENMARK
Korn/Ferry International A/S*** 100% (INACTIVE)
FRANCE
Korn/Ferry International & Cie, S.N.C.** 100%
Korn/Ferry International, S.N.C.** Brussels (Branch)
Korn/Ferry International, S.N.C.** Amsterdam (Branch)
K/FI
REVISED January 31, 1997
PAGE 2
GERMANY
Korn/Ferry International, GmbH, 100%
GREECE
Korn/Ferry International S.A. 100%
HONG KONG
Korn/Ferry International (H.K.) Limited 100%
HUNGARY
Korn/Ferry International Budapest
Individual Consulting & Services Ltd.
(Short Form Name: K/F Ltd.) 100%
ITALY
Korn/Ferry Carre/Xxxxx International S.R.L. 100%
JAPAN
Nihon Korn/Ferry International 100%
NETHERLANDS
K/FI Holdings BV (Netherlands) 100% (INACTIVE)
Korn/Ferry Carre/Xxxxx International B.V. 100%
NEW ZEALAND
Korn/Ferry International (New Zealand) Ltd. 100%
NORWAY
Korn/Ferry Carre/Xxxxx International A/S 100%
POLAND
Korn/Ferry Carre/Xxxxx International Sp.zo.o 100%
PUERTO RICO
Korn/Ferry Caribbean, Inc.*** 100%
ROMANIA
Korn/Ferry International srl. 100%
K/FI
REVISED January 31, 1997
PAGE 3
SINGAPORE
Korn/Ferry International Pte. Ltd. 100%
SLOVAKIA
New Europe Consulting Group, spol. s.r.o. 100%
SPAIN
Korn/Ferry Espana, S.A. 100%
SWEDEN
Korn/Ferry Carre'/Xxxxx International, A.B. 100%
SWITZERLAND
Korn/Ferry (Switzerland) S.A. (Zurich) 100%
Korn/Ferry International S.A. (Geneva) 100%
Xxxx Xxxxx International (Geneva) 100% (INACTIVE)
K/F Associates AG 100%
UNITED KINGDOM
Korn/Ferry International, Limited 100%
Xxxx Xxxxx International Group Limited 100%
Xxxx Xxxxx International Limited 100%
Pintab Associates Limited 100%
UNITED STATES
Korn/Ferry International 100%
Strategic Compensation Group, Inc. 100%
Xxxxx & Associates, Inc. 100% (INACTIVE)
Continental American Management Co. 100% (INACTIVE)
Xxxx Xxxxx International Group Limited 100% (INACTIVE)
Korn/Ferry Carre'/Xxxxx Worldwide, Inc 100%
Korn/Ferry S.A. 100% (INACTIVE)
K/FI
REVISED January 31, 1997
PAGE 4
VENEZUELA
Korn/Ferry International Consultores
Asociados, C.A. 100%
Korn/Ferry International Consultores
Asociados, C.A. Bogota (Branch)
* Includes Directors' qualifying shares
** In process of being converted to a full
subsidiary of Korn/Ferry International
*** In the process of liquidation.
KORN/FERRY INTERNATIONAL EXHIBIT D
1/31/97
Notes
Description Payable
---------------------------------------------------------------------------- ----------------
Section 4.02 (a)(i)
-------------------
Bank Lines of Credit - United States
First Business Bank/Bank of America $500,000
Loans against Cash Surrender Value of Life Insurance -
Loans against cash surrender values of life insurance policies are not
considered indebtedness of the Company for purposes of this loan
agreement. These amounts are considered to be a reduction of the related
assets as recorded in the financial statements of the Company. -
----------------
$500,000
================
Section 4.02 (a)(vi)
--------------------
Indebtedness incurred incident to repurchase of the Company's capital stock
and to payment of benefits to former employees. Loans are payable in
installments over a five year period and are subordinated to bank debt.
Xxxxx Xxxxxx $38,000
1972 Childrens Trust - Xxxxxxx Xxxxx $470,000
California Community Foundation $151,000
California Community Foundation & Xxxxxxx Xxxxx Trustee $990,000
Xxx Xxxxx $228,000
Xxx Xxxxxx $56,000
Xxxxxxx Xxxxxxxx $313,000
Xxx Defregger $88,000
Xxxxxxxx Xxxxxxxxxxxx $163,000
Xxxxxxx Xxxxx $1,096,000
Xxxxx Xxxxxxxxx $18,000
Wilmot Gravenslund $145,000
Xxxxxxx Xxxxxxxx $192,000
Xxxx Xxxxxx $76,000
Xxxxx Xxxxxx $26,000
Xxxx Xxxxxx $28,000
Xxxxxx Xxxxxxx $10,000
Xxxxx Xxxxx $64,000
Xxxxxx Xxxxxxx $26,000
Xxxxx Latino $26,000
Xxxxxx Xxxxxx $132,000
Xxxxxxxx Xxxxx $66,000
Xxxxxx XxXxxxx $19,000
Xxxxxx Xxxx $6,000
Xxxxxx Xxxxxxxx $63,000
Win Xxxxx $19,000
Xxxx Xxxxxx $48,000
Xxxxxx Xxxxx $88,000
Buzz Xxxxxxx $5,000
Xxxx Xxxxxxxxx $41,000
Xxxx Xxxxxxxx $26,000
Xxxxxxx Xxxxxx $78,000
Xxxx-Xxxxx Van Den Borre $101,000
Xxxxxxxx Xxxxxx $178,000
Xxxxxx Wilbrez $27,000
Xxxxxxx Xxxxxx $3,000
----------------
$5,104,000
================
